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Vast majority of mortgage brokers forecast boom in loans for UK ‘staycation’ properties

13 Jan 2020

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New research* from specialist lender Cambridge & Counties Bank has found that the vast majority (85%) of mortgage brokers expect an increase in demand for property loans specifically designed to help investors buy holiday lettings properties in the UK over the next 12 months.

Of this, 29% expect a “significant” rise. Around one in 10 (11%) expect demand to stay flat and just 2% expect a fall in demand.

On average, brokers expect lending volumes to grow 11% over the next 12 months; one in 20 (5%) mortgage brokers said that volumes will increase by more than 15%.

The key reason given for the rise in demand from property investors for UK holiday lets was a direct consequence of Brexit and the fall in the value of the pound favouring UK holidays (cited by 45% of respondents).

Other reasons included the favourable taxation for holiday properties (41%); an expected rise in UK holidaymakers choosing UK holidays over the foreign trips (40%); and an expected rise in foreigners/ tourists looking for UK holidays (37%). Nearly three in 10 (29%) said that better yields from holiday lets versus traditional buy-to-lets was a key driver of growth.

Despite the bullish sentiment towards UK ‘staycations’, almost half (45%) of mortgage brokers said that the market in lending products designed specifically to cater for holiday let investors was “under competitive” and ripe for new entrants. Almost two thirds (63%) said products need to be tailored more for their specific needs and 26% found there is little differentiation in the market.

To further boost lending in the sector, two thirds of mortgage brokers (66%) said products should be made available for larger portfolios and borrowings. In addition, two fifths (41%) said that mortgage terms should be lengthened while 31% said income criteria should be relaxed.

Cambridge & Counties Bank, one of the UK’s leading providers of specialist property loans for buy to let investors, has recently launched a specific mortgage product aimed at investors looking to buy and develop UK holiday lettings properties. Holiday let properties offer favourable tax benefits that are not typically available on standard buy to let properties.

Simon Lindley, Chief Development Officer at Cambridge & Counties Bank said:

“The UK is very likely to become a much more attractive holiday destination and one result is an expected boom in demand for quality UK holiday lets. The specialist lending market for this sector has historically been underserved but Cambridge & Counties Bank is focused on leading the market and we firmly believe our product provides a dedicated solution in the UK.”

* Research carried out by Pure Profile on 100 UK-based mortgage advisers in September 2019